Board Policies

Ends Policies

Executive Limitations

B – Global Executive Constraint
B1 – Financial Condition
B2 – Planning and Budgeting
B3 – Asset Protection
B4 – Membership Rights and Responsibilities
B5 – Treatment of Consumers
B6 – Staff Treatment and Compensation
B7 – Communication to the Board
B8 – Board Logistical Support
B9 – GM Succession
B10 – Food and Store

Board Process

C – Global Governance Commitment
C1 – Governing Style
C2 – The Board’s Job
C3 – Agenda Planning
C4 – Board Meetings
C5 – Directors’ Code of Conduct
C6 – Officers’ Roles
C7 – Board Committee Principles
C8 – Governance Investment
C9 – Board Relations with Members
C10 – Initiatives and Boycotts

Board - Management Relationship

D – Global Board-Management Connection
D1 - Unity of Control
D2 – Accountability of the GM
D3 – Delegation to the GM
D4 – Monitoring GM Performance

Election Policies


ENDS POLICIES

The Davis Food Cooperative exists so that our current and future member-owners and other people in the community have:

• a thriving, cooperatively owned business;
• access to healthful, sustainable, higher quality, and locally grown and produced foods;
• a retail store that satisfies customers;
• an improved environment and a more sustainable food system;
• education that leads to informed choices about health, food systems, the environment and cooperatives; and,
• a satisfied, motivated staff.

MONITORING

All Ends monitoring reports will contain the following four elements:

A. Unless a new End, annual comparisons between previous reporting periods and current reporting period.
B. Successful results/achievements of the End: "What's going well".
C. Areas needing improvement.
D. When action is required, an action plan to achieve improvement with a timeline for achievement.

The Board may specify additional monitoring criteria for a particular End.

Revised June 2011.


Executive Limitations

Revised October 2016.

B – Global Executive Constraint

The General Manager must not cause or allow any practice, activity, decision, or organizational circumstance that is unlawful, imprudent, or in violation of commonly accepted business and professional ethics and practices, or in violation of the Cooperative Principles.

Revised October 2016.

B1 – Financial Condition and Activities

With respect to the actual, ongoing financial conditions and activities, the General Manager must not cause or allow the Cooperative to be unprepared for future opportunities, the development of fiscal jeopardy, or key operational indicators to be below average for our industry.

The GM must not:

  1. Allow sales growth to be inadequate.
  2. Allow operations to generate an inadequate net income.
  3. Allow liquidity (the ability to meet cash needs in a timely and efficient fashion) to be insufficient.
  4. Allow solvency (the relationship of debt to equity) to be insufficient.
  5. Allow growth in ownership and owner paid-in equity to be insufficient.
  6. Default on any terms that are part of the Cooperative’s loans.
  7. Allow late payment of contracts, payroll, loans or other financial obligations.
  8. Incur debt other than trade payables or other reasonable and customary liabilities incurred in the ordinary course of doing business.
  9. Acquire, encumber or dispose of real estate.
  10. Allow tax payments or other government-ordered payments or filings to be overdue or inaccurately filed.
  11. Use restricted funds for any purpose other than that required by the restriction.
  12. Allow financial record keeping systems to be inadequate or out of conformity with Generally Accepted Accounting Principles (GAAP).
  13. Make any loans without direction of the Board by written resolution.

B2 - Planning and Financial Budgeting

The General Manager must not operate without annual and multi-year budgets and plans that address intentional and improved Ends accomplishment along with avoidance of fiscal jeopardy.

The GM must not:

  1. Create plans or budgets that
    1. Risk incurring those situations or conditions described as unacceptable in the Board policy “Financial Condition and Activities.”
    2. Omit credible projection of revenues and expenses, owner investment and return, separation of capital and operational items, cash flow, and disclosure of planning assumptions.
    3. Do not address excellence in business systems and operations.
    4. Have not been tested for feasibility.
  2. Provide less for Board prerogatives during the year than is set forth in the board budget.

B3 - Asset Protection

The General Manager must not allow assets to be unprotected, unreasonably risked, or inadequately maintained.

The GM must not:

  1. Allow equipment and facilities to be inadequately insured, or otherwise unable to be replaced if damaged or destroyed, including coverage for any losses incurred due to business interruption.
  2. Allow unnecessary exposure to liability or lack of insurance protection from claims of liability.
  3. Allow deposits or investments to be unreasonably risked.
  4. Allow inadequate security of premises and property.
  5. Allow data, intellectual property, or files to be unprotected from loss, theft or significant damage.
    1. Allow improper usage of members’ and customers’ personal information.
  6. Allow purchasing that is uncontrolled or subject to conflicts of interest.
  7. Allow lack of due diligence in contracts.
  8. Allow damage to the Cooperative’s public image.

B4 - Membership Rights and Responsibilities

The General Manager must not allow members to be uninformed or misinformed of their rights and responsibilities.

The GM must not fail to:

  1. Create or implement a member equity system with the following qualities:
    1. The required member equity, or fair share, is determined by the Board.
    2. Members are informed that equity investments are a) at risk, and b) generally refundable, though the Board retains the right to withhold refunds when necessary to protect the Cooperative’s financial viability.
    3. Equity will not be refunded if such refunds would lead to a net decrease in total member paid-in equity, or would risk, cause or exacerbate non-compliance with any Financial Condition policy.
  1. Implement a patronage dividend system that
    1. Complies with IRS regulations.
    2. Allows the Board to examine a range of options and implications, so the Board can make a timely determination each year concerning how much, if any, of the Cooperative’s net profit will be allocated and distributed to members.

B5 - Treatment of Customers

The General Manager must not be unresponsive to customer needs.

The GM must not fail to:

1) Strive to provide exceptional value and service to customers.

2) Continuously examine industry best practices for customer service.

3) Operate a system for soliciting customer feedback and responding in a timely manner.

B6 - Staff Treatment and Compensation

The General Manager must not treat staff in any way that is unfair, unsafe, or unclear.

The GM must not fail to:

  1. Operate with written personnel policies that:
    1. Clarify rules for staff.
    2. Provide for fair and thorough handling of grievances in a way that does not include the board as a participant in the grievance process.
    3. Are accessible to all staff.
    4. Inform staff that employment is neither permanent nor guaranteed.
  2. Cause or allow personnel policies to be consistently applied.
  3. Provide for adequate documentation, security and retention of personnel records and all personnel related decisions.
  4. Establish compensation and benefits that are internally or externally equitable.
  5. And may not: Change the GM’s own compensation and benefits, except as his or her benefits are consistent with a package for all other employees.

B7 - Communication to the Board

The General Manager must not cause or allow the Board to be uninformed or unsupported in its work.

The GM must not fail to:

Submit monitoring reports that are timely, accurate, or include operational definitions and verifiable data directly related to each section of the policy.

  1. Report in a timely manner any actual or anticipated noncompliance with any Board policy, along with a plan for reaching compliance and a proposed schedule regarding follow-up reporting.
  2. Inform the Board of relevant legal actions, media coverage, trends, public events of the Cooperative, or internal and external changes.
  3. Share his/her opinion if the GM believes the Board is not in compliance with its own policies on Governance Process and Board-Management Delegation, particularly in the case of Board behavior that is detrimental to the work relationship between the Board and the GM.
  4. Deal with the Board equitably and avoid favoring or allowing privileges for certain directors over others except when responding to officers or committees duly charged by the Board.
  5. Supply for the Board’s consent agenda all decisions delegated to the GM yet required by law, regulation, or contract to be Board-approved.
  6. Provide a mechanism for official board, officer, and task force communications.

B8 - Board Logistical Support

The General Manager must allow the Board to have adequate logistical support.

The GM must not fail to:

  1. Provide the Board with sufficient staff administration to support governance activities and Board communication.
  2. Allow the board to have a workable mechanism for official board, officer or committee communications.
  3. Allow directors to possess a current copy of the Policy Register and the Bylaws.
  4. Provide adequate information and notice to members concerning Board actions, meetings, activities and events.
  5. Allow sufficient archiving of board documents.

B9 - Emergency GM Succession

To protect the Board from sudden loss of GM services, the GM must not have less than one other manager sufficiently familiar with Board and GM issues and processes to enable her/him to take over with reasonable proficiency as an interim successor.

B10 - Food and Store

DFC’s end statements pledge commitments to responsible environmental practices, healthy food, and educated customers. Accordingly, the general manager shall not fail to:

A. Position DFC at the forefront of promoting local, organic and natural foods.

i. Establish a merchandising policy that emphasizes foods and products having one or many of the following criteria: local production/harvest, organic certification, high nutritional value, low levels of processing, GMO-free, democratic or cooperative ownership of production, necessary for special diets, and supportive of environmental and economic sustainability.

ii. Allow DFC to carry some foods that do not meet the above criteria in order to provide service to members who purchase those foods.

B. Maintain high standards of safety and cleanliness in food production and handling, and assure that store facilities and systems enhance employees’ ability to maintain these high standards.

C. Advance an educational shopping environment.

i. Provide, in addition to legal requirements for nutrition facts, extensive product signage and labeling that highlight product sources, systems of production and harvest, noteworthy ingredients, and potentially adverse health effects.

ii. Offer newsletters, web pages, classes, speakers, events, books and advertising that include educational components.

D. Offer a range of products accessible to people of various income levels.

i. Conduct price comparisons with similar and competing stores in the region.

ii. Offer sale items and discount programs.

iii. Collaborate with other co-ops and small businesses to buy goods at reduced prices.

E. Encourage members and customers to communicate their opinions and wishes regarding DFC merchandising.

i. Provide a variety of channels for member feedback on food and merchandising.

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Board Process

Revised November 2016.

C – Global Governance Commitment

Acting on behalf of our owners, the Board ensures the success of the cooperative by working together effectively, empowering and holding accountable professional management, providing strategic leadership for our cooperative, and perpetuating our democratic organization.

C1 - Governing Style

We will govern in a manner consistent with the Four Pillars of Cooperative Governance

In order to do this, we will:

  1. Be a strategic leader by focusing our vision outward and toward the future.
  2. Ensure effective systems of delegating authority to professional management, holding the use of that power accountable, and clearly distinguishing between board and management responsibilities.
    1. Observe the 10 Policy Governance principles (Ends Policies, Ownership, Board Process Policies, Board Holism, Board-Management Relationship Policies, Governance Position, Limitations Policies, Policies/Decisions Come in Sizes, Any Reasonable Interpretation, Monitoring
  3. Maintain team discipline, authority and responsibility.
  4. Practice the habits of a successful democracy.
  5. Obey all relevant laws and bylaws.

C2 - The Board's Job

In order to govern successfully, we will:

  1. Practice, protect, promote and perpetuate a healthy democracy for our Cooperative.
  2. Hire, compensate, delegate responsibility to, and hold accountable a General Manager.
    1. Use a strategic process to establish the value of GM compensation, and complete this process in a timely manner.
  3. Assign responsibility in a way that honors our commitment to empowerment and clear distinction of roles.
  4. Rigorously monitor operational performance in the areas of Ends and Executive Limitations, and Board performance in the areas of Board Process and Board-Management Relationship.
  5. Perpetuate the Board’s leadership capacity using ongoing education and training, a robust recruitment, qualification and nomination process and fair elections.

a. Ensure that DFC election policies are established, maintained, and adhered to.

  1. Perform other duties as required by the bylaws or because of limitations on GM authority.

C3 - Agenda Planning

We will follow a strategic multi-year work plan and annual agenda that focuses our attention forward and outward.

  1. We will create, and modify as necessary, an annual calendar that includes tasks and events related to our multi-year work plan, membership meetings, Board training schedule, monitoring schedule, and the GM evaluation and compensation decisions as outlined in our Board-Management Relationship policies.
  2. Board meeting agendas will be determined by the Board president, and may be modified at the meeting by a majority vote of the Board.

C4 - Board Meetings

Board meetings are for the task of getting the Board’s job done.

  1. We will use Board meeting time only for work that is the whole Board's responsibility. We will avoid committee issues, operational matters, personal concerns and other topics that are not the highest and best use of our time.
  2. Meetings will be open to the membership except when executive session is officially called.
    1. We may occasionally use executive session to deal with confidential matters, as long as the purpose of the session is stated. When possible, announcement of the executive session should be on the published agenda.
  3. We will seek consensus through discussion. We will then finalize and document decisions through the use of motions, seconds and majority vote.

C5 - Director's Code of Conduct

We each commit ourselves to ethical, professional and lawful conduct.

  1. Every director is responsible at all times for acting in good faith, in a manner which she/he reasonably believes to be in the best interests of the Cooperative, and with such care as an ordinarily prudent person in a like position would use under similar circumstances.
  2. Directors must demonstrate unconflicted loyalty to the interests of the Cooperative’s owners. This accountability supersedes any conflicting loyalty such as that to advocacy or interest groups, membership on other Boards or staffs, and the personal interest of any director acting as an individual consumer or member.
  3. Directors will engage in discussions to gain a shared understanding of what is a potential conflict of interest and how to deal with it/them.
    1. There will be no self-dealing or any conduct of private business or personal services between any director and the Cooperative except as procedurally controlled to assure openness, competitive opportunity and equal access to “inside” information.
    2. At a new director’s first board meeting, he/she will complete the “Conflict of Interest Disclosure” form, and will verbally report to the whole board the potential conflicts. Any subsequent potential conflicts will be reported to the whole board immediately.
    3. When the Board is to decide on an issue about which a director has an unavoidable conflict of interest, that director shall abstain from the conversation and the vote.
    4. A director who applies for employment must first resign from the Board.
    5. Any director who is also a paid employee has the same duties and responsibilities as any other director and has the additional duty of clearly segregating staff and Board responsibilities.
  4. Directors may not attempt to exercise individual authority over the organization.
    1. When interacting with the GM or employees, directors must carefully and openly recognize their lack of authority.
    2. When interacting with the public, the press, or other entities, directors must recognize the same limitation and the inability of any director to speak for the Board except to repeat explicitly stated Board decisions.
  5. Directors will respect the confidentiality appropriate to issues of a sensitive nature and must continue to honor confidentiality after leaving Board service.
  6. Directors will prepare for attend, and participate fully in all Board meetings and trainings.
  7. Directors will support the legitimacy and authority of the Board’s decision on any matter, irrespective of the director’s personal position on the issue.
  8. Any director who does not follow the code of conduct policy can be removed from the Board by a 2/3 majority vote of the remaining Board.

C6 - Officer's Roles

We will elect officers in order to help us accomplish our job.

  1. No officer has any authority to supervise or direct the GM.
  2. Officers may delegate their authority but remain accountable for its use.
  3. The president ensures the Board acts consistently with Board policies.
    1. The president is authorized to make decisions that are consistent with Board Process and Board-Management Relationship policies in order to facilitate the Board’s functioning.
    2. The president will chair and set the agenda for Board meetings.
    3. The president plans for leadership (officer) perpetuation.
    4. The president may represent the Board to outside parties.
  4. The vice-president will perform the duties of the president in her/his absence.
  5. The treasurer will lead the Board’s process for creating and monitoring the Board’s (not the Cooperative’s) budget.
    1. In addition, the treasurer will facilitate the Board’s understanding of the financial condition of the Cooperative and (insert whatever the bylaws require and the Board has not chosen to delegate to management).
  6. The secretary will make sure the Board’s documents are accurate, up to date, and appropriately maintained.

In addition, the secretary will facilitate responses to and record keeping of correspondence to the Board.

C7 - Board Task Force Principles

We will use Board task forces only to help us accomplish our job.

  1. Task Forces will reinforce and support Board holism.
    1. In particular, task forces help the whole Board move forward when they research alternatives and bring back options and information.
  2. Board task forces may not speak or act for the Board except when formally given such authority for specific and time-limited purposes.
  3. The Board will establish, regularly review and control task force responsibilities in written task force charters.
    1. We will carefully state task force expectations and authority to make sure they do not conflict with authority delegated to the GM.

C8 - Governance Investment

We will invest in the Board’s governance capacity.

  1. We will make sure that Board skills, methods and supports are sufficient to allow us to govern with excellence.
  2. We will incur governance costs prudently, though not at the expense of endangering the development and maintenance of superior capability.
    1. We will use training and retraining liberally to orient new directors and board candidates, as well as to maintain and increase existing directors’ skills and understanding.
    2. We will arrange outside monitoring assistance as necessary so that the Board can exercise confident control over organizational performance.
    3. We will use outreach mechanisms as needed to ensure our ability to listen to owner viewpoints and values.
    4. We will use professional and administrative support.
  3. We will develop the Board’s annual budget in a timely way so as to not interfere wit the development of the Cooperative’s annual budget.
  4. We will maintain our strength and continuity through the development of skilled, committed and motivated directors.

C9 - Board Relations with Members

The Board will take actions sufficient to ensure that open communication exists between Directors and members. These will include reporting on Board activities and accepting input from members.

It is our policy and procedure to prefer informal mediation as a means of settling conflict between member owners and the Board.

C10 - Initiatives and Boycotts

Our Bylaws provide both referendum (a process reserved to the Board) and initiative (which may be initiated by the Board or the Membership) as available democratic processes, and this Policy sets out procedures for resolving categories of actions that may use those processes.

Before beginning the initiative process for a boycott , a product may be formally challenged by any member in good standing who believes the Co-op should discontinue or de-emphasize it. The members should provide the Board of Directors with the following information in writing:

• The reason for the proposed action and an explanation of how this change will benefit the overall membership and the community;

• Documentation supporting that reason;

• The names of organizations supporting the action in question or other similar actions;

• The names of any other co-ops or grocery stores presently supporting the action in question or other similar actions;

• A complete list of products covered by the proposed action; and

• An exact list of products covered by the proposed action which are carried (at this time) by the Davis Food Co-op.

Before beginning the initiative process for any reason other than a boycott , any member in good standing may make a request of the Board of Directors by providing the following information in writing:

• The precise action desired;

• The reason for the proposed action and an explanation of how this change will benefit the overall membership and the community;

• Documentation supporting that reason;

• The names of organizations supporting the action in question or other similar actions; and

• The names of any other co-ops or grocery stores presently supporting the action in question or other similar actions.

The Board will certify at a regular Board Meeting that the information presented is complete, and require the GM to respond with a decision regarding the proposed action in writing by the next Board meeting. If the Board does not certify that the information is complete, the Board must do so with a vote in the form "The Board acknowledges receipt of proposal X, but asks member X to complete the proposal by providing XYZ."

If the Board is unsatisfied with the action chosen or response given (including a non response) by the GM, the Board may vote to place the proposal on the ballot as a referendum as set out in the bylaws under article X, section 1.

If a member is unsatisfied with the response of the GM and of the Board, they may put forward an initiative as set out in the bylaws under article X, section 2.

The date of record for determining the number of shareholder signatures needed for a valid initiative petition has been set by the Board (upon a motion duly made and passes at the March 2010 meeting) as the first day of the month prior to the petition being filed.

In all cases, it is the preference of the Board of Directors to resolve disagreements about policy and specific products by education and compromise, rather than resorting to initiatives.

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Board-Management Relationship

Revised December 2016.

D – Global Board-Management Connection

The Board’s sole official connection to the operations of the cooperative will be through the General Manager.

D1 - Unity of Control

Only officially passed motions of the Board are binding on the GM.

  1. Decisions or instructions of individual directors, officers, or committees and or task forces are not binding on the GM except in rare instances when the Board has specifically authorized this power.
  2. In the case of directors or task forces requesting information or assistance without Board authorization, the GM can refuse any requests that, in the GM’s opinion, may disrupt operations or that require too much staff time or resources.

D2 Accountability of the GM

The General Manager is the Board’s only link to operational achievement and conduct.

  1. The Board will view GM performance as identical to organizational performance so that organizational accomplishment of Ends and organizational operation within Executive Limitations will be viewed as successful GM performance.
  2. The Board will not instruct or evaluate any employee other than the GM.

D3 - Delegation to the GM

The Board delegates authority to the GM through written Ends and Executive Limitations policies.

  1. As long as the GM uses any reasonable interpretation of the Board’s Ends and Executive Limitations policies, the GM is authorized to establish all further policies, practices and plans for the cooperative. The Board will respect and accept the GM’s choices as long as those choices are based on reasonable interpretations of Board policies.
  2. If the Board changes an Ends or Executive Limitations policy, the change only applies in the future.

D4 - Monitoring GM Performance

The Board will systematically and rigorously monitor and evaluate the GM’s job performance compared to expectations set forth in Board policies.

  1. The Board will acquire monitoring information by one or more of three methods: (a) by internal report, in which the GM discloses policy interpretations and compliance information to the Board; (b) by external report, in which an external, disinterested third party selected by the Board assesses compliance with Board policies; or (c) by direct Board inspection, in which a designated director(s)or task force assesses compliance with the policy.
  2. In every case, the Board’s standard for compliance will be any reasonable GM interpretation (as described by operational definitions and metrics) of the Board policy being monitored. The Board is the final arbiter of reasonableness but we will always judge with a “reasonable person” test rather than with interpretations favored by individual directors or by the Board as a whole.
  3. The Board will accept that the GM is compliant with a policy if he/she presents a reasonable interpretation and adequate data that demonstrate accomplishment of that interpretation.
  4. The Board will monitor all policies that instruct the GM. The Board can monitor any policy at any time by any method listed above but will ordinarily follow the schedule outlined in the Board Annual Calendar.

The Board's annual evaluation of the General Manager, based on a summary of the monitoring reports received will be completed by January 31. The Board will make its decisions concerning the evaluation no later than February 28.

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